Puri Constructions Private Limited v. Additional Commissioner Of Income

$~ * IN THE HIGH COURT OF DELHI AT NEW DELHI % Judgment reserved on: 15 January 2024 Judgment pronounced on: 13 February 2024 + W.P.(C) 9483/2019 & CM APPL 39041/2019 PURI CONSTRUCTIONS PRIVATE LIMITED ..... Petitioner Through: Mr. Puneet Agarwal, Mr. Yuvraj Singh & Mr. Chetan Kumar, Advs. versus ADDITIONAL COMMISSIONER OF INCOME TAX & ORS. .... Respondents Mr. Aseem Chawla, SSC with Ms. Pratishtha Chaudhary, Mr. Aditya Gupta & Mr. Navin Rohila, Advs. Through: + W.P.(C) 11232/2019 & CM APPL. 46219/2019 NATUREVILLE PROMOTERS PRIVATE LIMITED ..... Petitioner Mr. Puneet Agarwal, Mr. Yuvraj Singh, Mr. Chetan Kumar, Advs. Through: versus UNION OF INDIA & ORS. Through: ..... Respondents Mr. Zoheb Hossain, SSC with Mr. Sanjeev Menon, JSC. + W.P.(C) 3850/2021 RPS INFRASTRUCTURE LIMITED ..... Petitioner Through: Mr. Ved Jain, Mr. Nischay Kantoor & Mr. Soniya Dodeja, Advs. versus ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-78, TDS-02 ..... Respondent Through: Mr. Sanjay Kumar, Ms. Easha & Ms. Hemlata Rawat, Advs. + W.P.(C) 4909/2023 M/S RAMPRASTHA ESTATES PVT. LTD ..... Petitioner Through: Mr. Puneet Agarwal, Mr. Yuvraj Singh, Mr. Chetan Kumar, Advs. versus UNION OF INDIA & ORS. ..... Respondents Through: Ms. Bakshi Vinita, SPC for R-1/ UOI. Through: Ms. Bakshi Vinita, SPC for R-1/ UOI. + W.P.(C) 4097/2021 & CM APPLs. 21620/2021, 21621/2021 NOVA REALTORS PVT LTD ..... Petitioner Through: Mr. Satyen Sethi & Mr. Arta Trana Panda, Advs. versus INCOME TAX OFFICER ..... Respondent Through: Mr. Sanjay Kumar, Ms. Easha & Ms. Hemlata Rawat, Advs. + W.P.(C) 4281/2021 & CM APPL. 47286/2021 M/S ALPHA CORP DEVELOPMENT PVT LTD M/S ALPHA CORP DEVELOPMENT PVT LTD ..... Petitioner Through: Mr. Debesh Panda & Kanishk Aggrawal, Advs. Mr. versus ASSISTANT COMMISISONER OF INCOME TAX & ANR. ..... Respondents Through: Mr. Puneet Rai, Mr. Ashvini Kumar, Mr. Rishabh Nangia, Advs. for Income Tax. Mr. Hemant Gupta, Ms. Shivang Jain & Ms. Swati Tiwari, Advs. for R-2. Signature Not Verified W.P.(C) 9483/2019 & Connected Matters + W.P.(C) 11552/2021 & CM APPL. 35649/2021 M/S VIPUL SEZ DEVELOPERS PVT. LTD. ..... Petitioner Through: Mr. Sumit K. Batra, Mr. Manish Khurana, Ms. Priyanka Jindal, Advs. Through: Mr. Sumit K. Batra, Mr. Manish Khurana, Ms. Priyanka Jindal, Advs. versus UNION OF INDIA & ORS. ..... Respondents Through: Mr. Asheesh Jain, CGSC with Mr. Gaurav Jain, Adv. for R-1. Mr. Zoheb Hossain, SSC with Mr. Sanjeev Menon, JSC. Mr. Zoheb Hossain, SSC with Mr. Sanjeev Menon, JSC. + W.P.(C) 4778/2021 & CM APPLs. 14735/2021, 22303/2021 M/S ALPHA CORP DEVELOPMENT PVT. LTD. ..... Petitioner Through: Mr. Debesh Panda & Mr. Kanishk Aggrawal, Advs. versus INCOME TAX OFFICER & ANR. ..... Respondent Through: Mr. Puneet Rai, Mr. Ashvini Kumar, Mr. Rishabh Nangia, Advs. for Income Tax. Mr. Hemant Gupta, Ms. Shivang Jain & Ms. Swati Tiwari, Advs. for R-2. + W.P.(C) 5319/2021 & CM APPL. 16386/2021 COUNTRYWIDE PROMOTERS PVT. LTD. ..... Petitioner Through: Mr. Piyush Kaushik, Adv. versus COMMISSIONER OF INCOME TAX (TDS)-1, DELHI & ANR. ..... Respondents ..... Respondents Through: Mr. Puneet Rai, Mr. Ashvini Kumar, Mr. Rishabh Nangia, Advs. for Income Tax. Signature Not Verified + W.P.(C) 5683/2021 & CM APPL. 17766/2021 M/S RAMPRASTHA ESTATES PVT. LTD. ..... Petitioner Through: Mr. Puneet Agarwal, Mr. Yuvraj Singh, Mr. Chetan Kumar, Advs. Through: Mr. Puneet Agarwal, Mr. Yuvraj Singh, Mr. Chetan Kumar, Advs. versus UNION OF INDIA & ORS. ..... Respondents Through: Mr. Ravi Prakash, CGSC with Ms. Usha Jamnal, Adv. for Resp./UOI. Mr. Sunil Agarwal, Sr. SC with Mr. Shivansh Pandya, Mr. Utkarsh Tiwari, Advs. Through: Mr. Ravi Prakash, CGSC with Ms. Usha Jamnal, Adv. for Resp./UOI. Mr. Sunil Agarwal, Sr. SC with Mr. Shivansh Pandya, Mr. Utkarsh Tiwari, Advs. + W.P.(C) 5715/2021 & CM APPL. 17894/2021 M/S FLORENTINE ESTATES OF INDIA LTD. ..... Petitioner Signature Not Verified + W.P.(C) 5683/2021 & CM APPL. 17766/2021 M/S RAMPRASTHA ESTATES PVT. LTD. ..... Petitioner Through: Mr. Puneet Agarwal, Mr. Yuvraj Singh, Mr. Chetan Kumar, Advs. Through: Mr. Puneet Agarwal, Mr. Yuvraj Singh, Mr. Chetan Kumar, Advs. versus UNION OF INDIA & ORS. ..... Respondents Through: Mr. Ravi Prakash, CGSC with Ms. Usha Jamnal, Adv. for Resp./UOI. Mr. Sunil Agarwal, Sr. SC with Mr. Shivansh Pandya, Mr. Utkarsh Tiwari, Advs. Through: Mr. Ravi Prakash, CGSC with Ms. Usha Jamnal, Adv. for Resp./UOI. Mr. Sunil Agarwal, Sr. SC with Mr. Shivansh Pandya, Mr. Utkarsh Tiwari, Advs. + W.P.(C) 5715/2021 & CM APPL. 17894/2021 M/S FLORENTINE ESTATES OF INDIA LTD. ..... Petitioner Through: Mr. Puneet Agarwal, Mr. Yuvraj Singh, Mr. Chetan Kumar, Advs. Singh, Mr. Chetan Kumar, Advs. versus UNION OF INDIA & ORS. ..... Respondents Through: Mr. Ravi Prakash, CGSC with Ms. Usha Jamnal, Adv. for Resp./UOI. Through: Mr. Ravi Prakash, CGSC with Ms. Usha Jamnal, Adv. for Resp./UOI. Mr. Sunil Agarwal, Sr. SC with Mr. Shivansh Pandya, Mr. Utkarsh Tiwari, Advs. Mr. Shivansh Pandya, Mr. Utkarsh Tiwari, Advs. + W.P.(C) 11531/2021 & CM APPL. 35542/2021 M/S VIPUL SEZ DEVELOPERS PVT. LTD. ..... Petitioner Through: Mr. Sumit Batra, Mr. Manish Khurana, Ms. Priyanka Jindal, Advs. Through: Mr. Sumit Batra, Mr. Manish Khurana, Ms. Priyanka Jindal, Advs. versus UNION OF INDIA & ORS. ..... Respondents Through: Mr. Asheesh Jain, CGSC with Mr. Gaurav Jain, Adv. for R-1. Mr. Zoheb Hossain, SSC with Mr. Sanjeev Menon, JSC. Mr. Gaurav Jain, Adv. for R-1. Mr. Zoheb Hossain, SSC with Mr. Sanjeev Menon, JSC. Signature Not Verified W.P.(C) 9483/2019 & Connected Matters Digitally SignedBy:KAMLESH KUMARSigning Date:13.02.202418:45:46 + W.P.(C) 299/2022 & CM APPL. 848/2022 RAHEJA DEVELOPERS LIMITED ..... Petitioner Through: Mr. Pratyush Raj & Ms. Riddhi Jain, Advs. versus ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 78(1) DELHI AND ORS. ..... Respondents Through: Ms. Akanksha Kaul, Ms. Versha Singh, Advs. for UOI. Mr. Zoheb Hossain, SSC with Mr. Sanjeev Menon, JSC. + W.P.(C) 4033/2022 & CM APPL. 12047/2022 RAHEJA DEVELOPERS LIMITED ..... Petitioner Through: Mr. Pratyush Raj & Ms. Riddhi Jain, Advs. versus ASSISTANT COMMISSIONER OF INCOME TAX & ORS. ..... Respondents Through: Ms. Akanksha Kaul, Ms. Versha Singh, Advs. for UOI. Mr. Zoheb Hossain, SSC with Mr. Sanjeev Menon, JSC. + W.P.(C) 4498/2022 & CM APPL. 13457-13458/2022 BENCHMARK INFOTECH PVT LTD ..... Petitioner Through: Mr. Satyen Sethi & Mr. Arta Trana Panda, Advs. versus INCOME TAX OFFICER TDS WARD73(3) ..... Respondent Through: Mr. Puneet Rai, Mr. Ashvini Kumar, Mr. Rishabh Nangia, Advs. for Income Tax. Signature Not Verified + W.P.(C) 4554/2022 & CM APPL. 13664-13665/2022 RPS INFRASTRUCTURE LIMITED ..... Petitioner Through: Mr. Ved Jain, Mr. Nischay Kantoor & Mr. Soniya Dodeja, Advs. versus ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-78-1 & ANR. ..... Respondents Through: Mr. Sanjay Kumar, Ms. Easha & Ms. Hemlata Rawat, Advs. + W.P.(C) 4647/2022 & CM APPL. 13960/2022 RPS INFRASTRUCTURE LIMITED ..... Petitioner Through: Mr. Ved Jain, Mr. Nischay Kantoor & Mr. Soniya Dodeja, Advs. versus ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE- 78-1 & ANR. ..... Respondents Through: Mr. Sanjay Kumar, Ms. Easha & Ms. Hemlata Rawat, Advs. + W.P.(C) 5365/2022 & CM APPL. 16059/2022 ONE POINT REALITY PVT LTD ..... Petitioner Through: Mr. Salil Kapoor, Ms. Ananya Kapoor, Mr. Utkarsh Kumar Gupta, Mr. Tarun Chanana & Mr. Sumit Lalchandani, Advs. versus INCOME TAX OFFICER, WARD 76(2) & ANR. ..... Respondents Through: Mr. Kamal Kant Jha, Sr. PC with Mr. Avinash Singh, Adv. for UOI. Mr. Zoheb Hossain, SSC with Mr. Sanjeev Menon, JSC. Signature Not Verified Signature Not VerifiedW.P.(C) 9483/2019 & Connected Matters Digitally SignedBy:KAMLESH KUMARSigning Date:13.02.202418:45:46 + W.P.(C) 5367/2022 & CM APPL. 16062/2022 versus ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE- 78-1 & ANR. ..... Respondents Through: Mr. Sanjay Kumar, Ms. Easha & Ms. Hemlata Rawat, Advs. + W.P.(C) 5365/2022 & CM APPL. 16059/2022 ONE POINT REALITY PVT LTD ..... Petitioner Through: Mr. Salil Kapoor, Ms. Ananya Kapoor, Mr. Utkarsh Kumar Gupta, Mr. Tarun Chanana & Mr. Sumit Lalchandani, Advs. versus INCOME TAX OFFICER, WARD 76(2) & ANR. ..... Respondents Through: Mr. Kamal Kant Jha, Sr. PC with Mr. Avinash Singh, Adv. for UOI. Mr. Zoheb Hossain, SSC with Mr. Sanjeev Menon, JSC. Signature Not Verified Signature Not VerifiedW.P.(C) 9483/2019 & Connected Matters Digitally SignedBy:KAMLESH KUMARSigning Date:13.02.202418:45:46 + W.P.(C) 5367/2022 & CM APPL. 16062/2022 ONE HEIGHT COLONIZERS PVT. LTD. ..... Petitioner Through: Mr. Ved Jain, Mr. Nischay Kantoor & Ms. Soniya Dodeja, Advs. versus INCOME TAX OFFICER, WARD 76(2) & ANR. ..... Respondents Through: Mr. Sanjay Kumar, Ms. Easha & Ms. Hemlata Rawat, Advs. + W.P.(C) 6552/2022 & CM APPL. 19907-19908/2022 JAGRAN DEVELOPERS PVT. LTD. ..... Petitioner Through: Ms. Ananya Kapoor & Mr. Utkarsh Kumar Gupta, Advs. versus NATIONAL FACELESS ASSESSMENT CENTRE Through: None ..... Respondent + JAGRAN DEVELOPERS PVT. LTD. W.P.(C) 6558/2022 & CM APPL. 19924-19925/2022 ..... Petitioner Through: Ms. Ananya Kapoor & Mr. Utkarsh Kumar Gupta, Advs. versus NATIONAL FACELESS ASSESSMENT CENTRE Through: None ..... Respondent + W.P.(C) 6631/2022 & CM APPL. 20143-20144/2022 ANSAL PROPERTIES AND INFRASTRUCTURE LTD ..... Petitioner Through: Mr. Tapas Ram Mishra, Adv. Signature Not Verified versus DY COMMISSIONER OF INCOME TAX CIRCLE 73(1) ..... Respondent Through: Mr. Aseem Chawla, Sr. SC with Ms. Pratishtha Chaudhary, Mr. Aditya Gupta, Mr. Navin Rohila, Advs. for Revenue. + W.P.(C) 6694/2022 & CM APPL. 20332-20333/2022 M/S FLORENTINE ESTATES OF INDIA LTD. ..... Petitioner Through: Mr. Puneet Agarwal, Mr. Yuvraj Singh, Mr. Chetan Kumar, Advs. versus UNION OF INDIA & ORS. ..... Respondents Through: Mr. Ravi Prakash, CGSC with Ms. Usha Jamnal, Adv. for Resp./UOI. Mr. Sunil Agarwal, Sr. SC with Mr. Shivansh Pandya, Mr. Utkarsh Tiwari, Advs. + W.P.(C) 6737/2022 & CM APPL. 20450-20451/2022 ACTIVE PROMOTERS PRIVATE LIMITED ..... Petitioner Through: Mr. Salil Kapoor, Ms. Ananya Kapoor, Mr. Utkarsh Kumar Gupta, Mr. Tarun Chanana & Mr. Sumit Lalchandani, Advs. versus INCOME TAX OFFICER WARD 73(1), DELHI ..... Respondent Through: Mr. Aseem Chawla, Sr. SC with Ms. Pratishtha Chaudhary, Mr. Aditya Gupta, Mr. Navin Rohila, Advs. for Revenue. Signature Not Verified W.P.(C) 9483/2019 & Connected Matters Digitally SignedBy:KAMLESH KUMARSigning Date:13.02.202418:45:46 + W.P.(C) 6893/2022 & CM APPL. 21015/2022 M/S OMAXE LTD ..... Petitioner Through: Mr. Puneet Agarwal, Mr. Yuvraj Singh, Mr. Chetan Kumar, Advs. Singh, Mr. Chetan Kumar, Advs. versus DEPUTY COMMISSIONER OF INCOME TAX & ORS. INCOME TAX & ORS. ..... Respondents Through: Mr. Vipul Agrawal, SSC with Mr. Gibran Naushad & Ms. Sakshi Shairwal, Adv. for R- 1 & R-3. Sakshi Shairwal, Adv. for R- 1 & R-3. + W.P.(C) 7978/2022 & CM APPLs. 24381/2022, 36849/2022 RAHEJA DEVELOPERS LIMITED ..... Petitioner Through: Mr. Pratyush Raj & Ms. Riddhi Jain, Advs. Jain, Advs. versus ASSISTANT COMMISSIONER OF INCOME TAX & ORS. ..... Respondents Through: Ms. Akanksha Kaul, Ms. Versha Singh, Advs. for UOI. Mr. Zoheb Hossain, SSC with Mr. Sanjeev Menon, JSC. Mr. Sanjeev Menon, JSC. + W.P.(C) 9236/2022 & CM APPL. 27686/2022 M/S TS REALTECH PVT. LTD ..... Petitioner Through: Mr. Puneet Agarwal, Mr. Yuvraj Singh, Mr. Chetan Kumar, Advs. Singh, Mr. Chetan Kumar, Advs. versus UNION OF INDIA & ORS. Through: ..... Respondents Mr. Gigi C. George & Mr. Dheeraj Singh, Advs. for Resp./UOI. Dheeraj Singh, Advs. for Resp./UOI. Mr. Aseem Chawla, Sr. SC with Ms. Pratishtha Chaudhary, Mr. Ms. Pratishtha Chaudhary, Mr. Signature Not Verified RAHEJA DEVELOPERS LIMITED ..... Petitioner Through: Mr. Pratyush Raj & Ms. Riddhi Jain, Advs. Jain, Advs. versus ASSISTANT COMMISSIONER OF INCOME TAX & ORS. ..... Respondents Through: Ms. Akanksha Kaul, Ms. Versha Singh, Advs. for UOI. Mr. Zoheb Hossain, SSC with Mr. Sanjeev Menon, JSC. Mr. Sanjeev Menon, JSC. + W.P.(C) 9236/2022 & CM APPL. 27686/2022 M/S TS REALTECH PVT. LTD ..... Petitioner Through: Mr. Puneet Agarwal, Mr. Yuvraj Singh, Mr. Chetan Kumar, Advs. Singh, Mr. Chetan Kumar, Advs. versus UNION OF INDIA & ORS. Through: ..... Respondents Mr. Gigi C. George & Mr. Dheeraj Singh, Advs. for Resp./UOI. Dheeraj Singh, Advs. for Resp./UOI. Mr. Aseem Chawla, Sr. SC with Ms. Pratishtha Chaudhary, Mr. Ms. Pratishtha Chaudhary, Mr. Signature Not Verified W.P.(C) 9483/2019 & Connected Matters Aditya Gupta, Mr. Navin Rohila, Advs. for Revenue. + W.P.(C) 11184/2022 & CM APPL. 32877/2022 M/S ONE POINT REALITY PRIVATE LIMITED ..... Petitioner Through: Mr. Salil Kapoor, Ms. Ananya Kapoor, Mr. Utkarsh Kumar Gupta, Mr. Tarun Chanana & Mr. Sumit Lalchandani, Advs. versus INCOME TAX OFFICER WARD 76(2), DELHI .. Respondent Through: Mr. Zoheb Hossain, SSC with Mr. Sanjeev Menon, JSC. + W.P.(C) 11220/2022 & CM APPL. 32975/2022 M/S ONE POINT REALITY PRIVATE LIMITED ..... Petitioner Through: Mr. Salil Kapoor, Ms. Ananya Kapoor, Mr. Utkarsh Kumar Gupta, Mr. Tarun Chanana & Mr. Sumit Lalchandani, Advs. versus INCOME TAX OFFICER WARD 76(2), DELHI ..... Respondent Through: Mr. Zoheb Hossain, SSC with Mr. Sanjeev Menon, JSC. + W.P.(C) 11706/2022 & CM APPL. 34819/2022 (Ex.) M/S PURI CONSTRUCTION LIMITED ..... Petitioner Through: Mr. Puneet Agarwal, Mr. Yuvraj Singh, Mr. Chetan Kumar, Advs. versus Signature Not Verified UNION OF INDIA & ORS. Through: ..... Respondents Mr. Bhagwan Swaroop Shukla, Page 10 of 134 CGSC with Mr. Vinay Shukla & Mr. Sharvan Kumar Shukla, Advs. for Resp./UOI. Mr. Kunal Sharma, Ms. Zehra Khan, SSCs with Mr. Shubhendu Bhattacharyya, Adv. + W.P.(C) 4920/2023 & CM APPL. 19028-19029/2023 BRAHMA CITY PRIVATE LIMITED ..... Petitioner Through: Mr. Salil Kapoor, Ms. Ananya Kapoor, Mr. Utkarsh Kumar Gupta, Mr. Tarun Chanana & Mr. Sumit Lalchandani, Advs. versus INCOME TAX OFFICER WARD 73 3 DELHI & ANR. ..... Respondents Mr. Puneet Rai, Mr. Ashvini Kumar, Mr. Rishabh Nangia, Advs. for Income Tax Mr. Bhagwan Swaroop Shukla, CGSC with Mr. Vinay Shukla & Mr. Sharvan Kumar Shukla, Advs. for Resp./UOI. Through: + W.P.(C) 5313/2023 & CM APPL 20713/2023 CHINTELS INDIA PVT LTD. ..... Petitioner Through: Mr. Kapil Goel & Mr. Sandeep Goel, Advs. versus DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 73(1), DELHI ..... Respondent Through: Mr. Aseem Chawla, SSC with Ms. Pratishtha Chaudhary, Mr. Aditya Gupta & Mr. Navin Rohila, Advs. CORAM: HON'BLE MR. JUSTICE YASHWANT VARMA HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV J U D G M E N T YASHWANT VARMA, J. 1.This batch of writ petitions assail the action initiated by the respondents predicated upon a purported failure on the part of the writ petitioners to deduct tax on payments made to the Haryana Shahari Vikas Pradhikaran[1] (earlier known as the Haryana Urban Development Authority, for short ―HUDA‖) under Section 194C of the Income Tax Act, 1961[2]. The respondents assert that the External Development Charges[3] which were paid by the writ petitioners to HSVP albeit on the directions of the Director General, Department of Town and Country Planning[4], Haryana, a department functioning under the Government of Haryana, would clearly fall within the ambit of Section 194C of the Act and as a consequence of default, the petitioners are liable to be proceeded under Section 201 as also to answer why penalty be not levied in terms of Section 271C of the Act. 2.We at the outset deem it appropriate to note and observe that we have heard learned counsels for respective sides solely on the question of whether the payment of EDC would fall within the ambit of Section 194C of the Act and whether the writ petitioners can be held liable to have deducted tax at source in terms of that provision. We thus propose to principally answer the primary question and consequentially leave it open for the writ petitioners as well as the respondents to proceed further in respect of notices that may have been issued referable to 1 HSVP 2 The Act 3 EDC 4 DTCP Sections 201 and Section 271C of the Act in accordance with the present judgment. 3.Since the questions raised were found to be common, we propose to briefly notice the salient facts as they obtain in W.P.(C) 11232/2019 and W.P.(C) 3850/2021. It may also be noted that the facts of each writ petition forming part of this batch and the status of individual cases has been gleaned from a detailed chart which was placed by the respondents and forms part of the record. 4.Natureville Promoters Private Limited[5] has preferred the aforenoted writ petition seeking the following reliefs:- ―(a) Quash and set aside the CIRCULAR F. NO. 370133/37/2017 - TPL Dated 23.12.2017 (Annexure -12); (b) Quash and set aside the Notices issued under Section 201(1)/ Section 201(1A) of the Income Tax Act dated 22.03.2017, 31.03.2017, 10.08.2017 and 19.07.2019 [(Annexure 3, 4, 8 ( colly) and 16 ( colly)]. (c) Quash and set aside the provisions of Section 4(1), and Section 2(31)(vi) being violative of the Article 289 of the Constitution of India imposing tax on income of State; (d) Declare that the EDC is not leviable to Income tax, and there is no liability to deduct TDS on the same under the Income Tax Act, 1961; (e) Prohibit and restrain the respondents from proceeding further with the matter; Pass such other order(s) or further orders as this Hon'ble Court deems fit and proper in the facts and circumstances of the case, for which act of kindness the Petitioner as is duty bound shall ever pray.‖ 5. It must at the outset be noted that although a challenge to the validity of Sections 4(1), Section 2(31)(vi) of the Act also appears to form part of the writ petition, no arguments on that score were 5 Natureville Promoters addressed before us. RPS Infrastructure Limited[6]raises a similar challenge as would be evident from the reliefs which are sought in the petition: ―A. Issuance of writ in the nature of Certiorari, Mandamus, Prohibition or any other appropriate writ, order or direction for quashing the impugned show cause notice dated 12.03.2021 issued by the Respondent being illegal, arbitrary and not legally sustainable in the eyes of law; B. Issuance of a writ, order and/or directions in the nature of certiorari, prohibition, mandamus or any other appropriate writ, order or direction staying the operation of the impugned show cause notice dated 12.03.2021 issued by the Respondent. C. Issuance of a writ, order and/or directions in the nature of certiorari, prohibition, mandamus or any other appropriate writ, order or direction staying all consequential proceedings, that may be initiated pursuant to the impugned notice under challenge issued under section 201(1)/201(1A) by the Respondent in the case of Petitioner for FY 2013-14. D. Grant an ad-interim ex parte stay in terms of prayers (a), (b) and (c) above; E. Issuance of a writ in the nature of mandamus or any other writ, order or direction, as deemed fit and proper in the facts and circumstances of the present case. It is further prayed that during the pendency of the present writ petition, the further proceeding before the Respondent may kindly be stayed in the interest of justice and equity.‖ 6. Natureville Promoters is stated to be engaged in the business of construction, promotion and development of land and real estate. It was granted license no. 99 of 2010 in Form LC-V dated 30 November 2010 D. Grant an ad-interim ex parte stay in terms of prayers (a), (b) and (c) above; E. Issuance of a writ in the nature of mandamus or any other writ, order or direction, as deemed fit and proper in the facts and circumstances of the present case. It is further prayed that during the pendency of the present writ petition, the further proceeding before the Respondent may kindly be stayed in the interest of justice and equity.‖ 6. Natureville Promoters is stated to be engaged in the business of construction, promotion and development of land and real estate. It was granted license no. 99 of 2010 in Form LC-V dated 30 November 2010 under the provisions of the Haryana Development and Regulation of Urban Areas Act, 1975[7] for carrying out a development project in collaboration with Puri Constructions Pvt. Ltd. It also appears to have entered into a bilateral agreement in Form LC-IV with the DTCPin 6 RPS Infrastructure 7 HDRUA Signature Not Verified W.P.(C) 9483/2019 & Connected Matters connection with the aforesaid project. On 22 March 2017, a notice came to be issued by the Income Tax authorities calling upon Natureville Promoters to explain why TDS had not been deducted on EDC payments made to HSVP. That EDC payments were made directly to HSVP is not questioned by the writ petitioners. Their challenge essentially stems from the fact that the said payment was made on the directions of the DTCP. Whether this aspect would have any material bearing on their alleged liability to deduct tax is one which we propose to deal with in the subsequent parts of this decision. 7.Reverting to the narration of facts, we note that the petitioner upon receiving the aforesaid notice appears to have approached the office of the DTCP seeking clarifications. The DTCP was asked by Natureville Promoters to clarify whether TDS provisions were applicable to payments made to HSVP. The aforesaid communication was followed by a further letter addressed by the petitioner to DTCP dated 31 July 2017 asking the concerned authority to clarify whether developers are required to deduct TDS on EDC payments that have been made. In the meanwhile, the Income Tax authorities issued yet another notice dated 10 August 2017 calling for further information from the writ petitioner. The DTCP on 06 October 2017 replied to the collaborator of Natureville Promoters, Puri Constructions, stating that EDC is a charge levied by the Government for carrying out external development works and that the same is deposited in the receipt head of the DTCP and would thus constitute Government receipt. It was further stated that no tax is being deducted thereon since it was Government receipt. 8.In the meanwhile, the Central Board of Direct Taxes[8] appears to have been approached by the Finance Secretary of the Government of Haryana and called upon to clarify the position. In terms of an Office Memorandum[9] dated 23 December 2017, the CBDT took the following position:- ―F. No.370133/372017-TPL Government of India Ministry of Finance Department of Revenue (Central Board of Direct Taxes) TPL Division ******* New Delhi, 23[rd] December, 2017 OFFICE MEMORANDUM Sub: Recommendations for relief from applicability of TDS provisions on External Development Charges (EDC) payable to Directorate of Town & Country Planning (DTCP) State Government of Haryana-regarding. Kindly refer to your letter dated 21st November, 2017 addressed to the Finance Secretary, along with the enclosures on the captioned subject. ―F. No.370133/372017-TPL Government of India Ministry of Finance Department of Revenue (Central Board of Direct Taxes) TPL Division ******* New Delhi, 23[rd] December, 2017 OFFICE MEMORANDUM Sub: Recommendations for relief from applicability of TDS provisions on External Development Charges (EDC) payable to Directorate of Town & Country Planning (DTCP) State Government of Haryana-regarding. Kindly refer to your letter dated 21st November, 2017 addressed to the Finance Secretary, along with the enclosures on the captioned subject. 2. In this regard it is submitted that provisions of non-deduction of tax under Section 196 of the Income-tax Act, 1961, is applicable to the Government and to the other authorities as mentioned under the Section. Accordingly, External Development Charges (EDC) if paid to Government of Haryana would be exempt from TDS provisions. However, in the instant case, it appears that the developer has made the payment in the nature of External Development Charges (EDC) not to the Government but to HUDA [Haryana Urban Development Authority) which is a development authority of State Government of Haryana and is a taxable entity under the income-tax Act, 1961. Hence, TDS provisions would be applicable on EDC payable by the developer to HUDA 3. It may be mentioned here that section 194 of the Income as Act, 1961 provides for non- deduction of tax in suitable cases. The 8 CBDT 9 OM Signature Not Verified HUDA may resort to aforesaid provision for exemption of TDS with regard to payment of EDC 4. This issues with the approval of Finance Secretary. (Dr. Rishi Kumar) DCIT (OSD) (TPL-III) Shri Praveen Jain Vice Chairman National Real Estate Development Council First Floor, 8, Community Centre, East of Kailash, New Delhi-110065 Tele:01126225795, 01141608570 Fax:01126225796‖ 9.Insofar as the DTCP is concerned, it vide its communication of 19 June 2018 while clarifying the position with respect to HSVP took the following stand:- ―DIRECTORATE OF TOWN & COUNTRY PLANNING HARYANA SCO No. 71-75, Sector-17 /C, Chandigarh, Website www.topharyana. gov .in 0172-2549347, E-mail: To The Chief Administrator, Haryana Shahri Vikas Pradhikaran, Panchkula, Memo No. DTCP /ACCTTS/AO(HQ)/CA0/2894/2018 Dated: 19.06.2018 Subject: Clarification on TDS Deductions on EDC Payments. Please refer to the matter cited as subject above. 1. Section 2(g) of the Haryana Development and Regulation of Urban Areas Act, 1975 defines that external development works (hereinafter referred as EDW) shall includes any or all infrastructure development works like water supply, sewerage, drains, provisions of treatment and disposal of sewage, sullage and storm water, roads, electrical works, solid complex, fire stations, grid sub-stations etc and/or any other work which the Director may specify to be executed in the periphery of or outside colony/area for the benefit of the colony/area. 2. As per Section 3(3)(ii), license holder has to pay proportionate development charges if the external development works as defined in clause (g) of section 2 are to be carried out by the Government or any other local authority. The proportion in which and the time within which, such payment is to be made, shall be determined by the Director. 3. Presently, external development works in the periphery of or outside colony/area for the benefit of the colony/area are being executed by Haryana Shahri Vikas Pradhikaran (hereafter HSVP) which is the Development Authority of State govt. Earlier upto 31.03.2017, Department of Town & Country Planning used to collect the external development charges from the colonizer to whom licences have been granted under Act No.8 of 1975 and the persons to whom permission for change of Land use have been granted under Act No. 41 of 1963, in the shape of bank draft drawn in favour of CA, HSVP and sent the same to CA, HSVP. 3. Presently, external development works in the periphery of or outside colony/area for the benefit of the colony/area are being executed by Haryana Shahri Vikas Pradhikaran (hereafter HSVP) which is the Development Authority of State govt. Earlier upto 31.03.2017, Department of Town & Country Planning used to collect the external development charges from the colonizer to whom licences have been granted under Act No.8 of 1975 and the persons to whom permission for change of Land use have been granted under Act No. 41 of 1963, in the shape of bank draft drawn in favour of CA, HSVP and sent the same to CA, HSVP. 4. As the receipt on account of EDC was not sufficient to carry out the all development works under EDC for the urban estate as per approved development plans, therefore, to meet out the shortfall, a new scheme Swaran Jayanti Haryana Urban Infrastructure Development Scheme (renamed as Mangal Nagar Vikas Yojana was approved by the State Govt. and appropriate budget provision for execution of development works has been made in the said scheme. From Financial Year 2017-18, the receipts on account of EDC is being deposited in the consolidated fund of the State under Major Receipt Head 0217 receipts and all license / CLU holders have also been directed vide order dated 12.05.2017 that payment of EDC in respect of license/ CLU granted by TCP Deptt. May be made online through e-payment gateway or in shape of demand drafts favouring Director, Town & Country Planning, Haryana. Required funds for execution of development works are released to HSVP after granting the sanction from the Finance Department. It is, therefore, clarified that HSVP is only an executing agency working for and on behalf of State Govt. for carrying out EDW for which funds are given to HSVP by the Govt. through TCP Deptt. Since, payment for EDC has been made to TCP Deptt. Of State Govt., no TDS was/is to be deducted out of payment made to Govt. for EDW. Dated: 19.06.2018 A copy with reference to representation on the subject cited matter is forwarded to CREDAI, Haryana, 12A, First Floor, Omaxe Square Building, District Center jasola, New Delhi-110044 & Satya Developers Pvt. Ltd., 34, Babar Lane, Bengali Market, New Delhi- 110004 for information please. Accounts Officer (HQ) For: Director, Town & Country Planning Haryana, Chandigarh‖ 10.In the meanwhile and taking note of the controversy which had arisen, DLF Utilities Limited, is stated to have approached the Punjab and Haryana High Court by way of CWP No. 1866/2018. While entertaining that writ petition, the High Court on 29 January 2018 passed the following interim order:- ―Issue notice of motion returnable on 27.03.2017. One of the questions that arises is whether the petitioner is at all liable to deduct tax at source. This in turn raises a question as to whether the external development charges are payable by the petitioner under the Haryana Development and Regulation of Urban Areas Act, 1975 to the Government of Haryana or to any other party. If it is to the Government of Haryana, it is possible that the exemption under Section 196 of the Income Tax Act, 1961 would apply. The petitioner states it entered into the agreements in Forms IV and LC-IV A. Prima facie, the agreements are with the Governor of Haryana. In these circumstances, petitioner shall pursuant to the impugned notice dated 22.01.2018 appear before the officer. Till further orders, the order, if any, however, shall not be given effect to.‖ 11.Writ petitions thereafter came to be filed before this Court including W.P. (C) 9483/2019 by the collaborator of Natureville Promoters and where upon taking note of the orders passed by the Punjab and Haryana High Court in DLF Utilities Limited, interim orders were passed providing that while proceedings may go on, any orders adverse to the petitioner, if passed, would not be given effect to. Similar orders operate on the various writ petitions forming part of this The petitioner states it entered into the agreements in Forms IV and LC-IV A. Prima facie, the agreements are with the Governor of Haryana. In these circumstances, petitioner shall pursuant to the impugned notice dated 22.01.2018 appear before the officer. Till further orders, the order, if any, however, shall not be given effect to.‖ 11.Writ petitions thereafter came to be filed before this Court including W.P. (C) 9483/2019 by the collaborator of Natureville Promoters and where upon taking note of the orders passed by the Punjab and Haryana High Court in DLF Utilities Limited, interim orders were passed providing that while proceedings may go on, any orders adverse to the petitioner, if passed, would not be given effect to. Similar orders operate on the various writ petitions forming part of this batch. It is this interim order which has continued on all the writ petitions forming part of this batch. 12.The sequence of events insofar as RPS Infrastructure is concerned follow a similar chronology. A notice under Section 201 and Section 201(1A) of the Act came to be issued against that writ petitioner on 16 December 2020. The charge in that notice was identical to that laid against Natureville Promoters, namely, the liability to deduct tax on EDC payments made to HSVP. 13.Responding to the aforesaid notice, RSP Infrastructure took the position that TDS was not liable to be deducted and prayed for the proceedings being dropped. Ultimately and by an order dated 12 March 2021, the Income Tax Department issued a final notice holding that HSVP was a taxable entity and consequently there was an evident failure on the part of RSP Infrastructure to deduct tax in accordance with the provisions made in Chapter XVII-B of the Act. 14.It becomes pertinent to note that the present litigation stems from the stand taken by the Income Tax Department that tax was liable to be deducted by virtue of the provisions made in Section 194C. It would further appear from the record that earlier also notices under Section 148 of the Act and based on a failure to deduct tax in respect of EDC payments had been issued against various entities and at which stage the respondents had taken the position that tax was liable to be deducted under Section 194 of the Act. One of those notices came to be challenged in BPTP Limitedv. Principal Commissioner of Income Tax (Central) – III & Anr.[10]The Court in BPTP upheld that challengeholding that no liability to deduct tax under Section 194 or 194I would 10 (2020) 421 ITR 59 arise. We deem it apposite to extract the following passages from BPTP:- Tax (Central) – III & Anr.[10]The Court in BPTP upheld that challengeholding that no liability to deduct tax under Section 194 or 194I would 10 (2020) 421 ITR 59 arise. We deem it apposite to extract the following passages from BPTP:- ―26. The Assessing Officer in paragraph 2 of the recorded reasons quotes that "External development charges is covered by the provisions of section 194 of the Income-tax Act, 1961. The assessee has failed to deduct tax at source on the payments made to the Haryana Urban Development Authority". There is no explanation or rationale for the aforesaid observation made by the Assessing Officer. We, therefore, cannot understand as to how the payment of external development charges being in the nature of statutory fees, could be subject to withholding tax under section 194 of the Act, a provision that is applicable to dividends. The nature of dividend payment is intrinsically different from external development charges and, therefore, the apparent reason for reopening seems to be erroneous, irrational and fallacious. The subsequent observation in paragraph 2 "as per the provisions of section 40(a)(ia) of the Income-tax Act, any sum payable on which tax is deductible at source under Chapter XVII-B but the same has not been deducted" appears to be based on the understanding that the provisions of section 194 are attracted to external development charges and, therefore, it is subject to withholding tax and consequently the provisions of section 40(a)(ia) of the Act would be attracted. Even if one were to ignore the provision of law quoted and relied upon by the Assessing Officer, and we were to agree with the contention of Revenue that while exercising the power, the source may not be specifically referred to or if wrongly mentioned to, it would not render the exercise of such power to be invalid, yet, we are unable to fathom as to how the Assessing Officer has arrived at the conclusion that the external development charges payment was subject to tax deduction at source. The Revenue in its counter-affidavit has sought to elaborate on the aforesaid reasons by contending that the external development charges payment is akin to rent. However, we are not impressed with this submission. Firstly, such an understanding is not borne out from the recorded reasons and, secondly, the Department cannot by way of a counter-affidavit supplement the recorded reasons by introducing such legal submissions. The source of the power in this case, as sought to be argued, is not discernible. 27. If the Assessing Officer harboured a reason to believe that the payment of external development charges requires deduction of tax at source under the provisions of the Income-tax Act, it ought to have disclosed the basis for such a view. The entire reasoning disclosed in the recorded reasons, for initiating the proceedings is completely silent on this aspect. It merely states that "Since, external development charges has income character, therefore it 27. If the Assessing Officer harboured a reason to believe that the payment of external development charges requires deduction of tax at source under the provisions of the Income-tax Act, it ought to have disclosed the basis for such a view. The entire reasoning disclosed in the recorded reasons, for initiating the proceedings is completely silent on this aspect. It merely states that "Since, external development charges has income character, therefore it should have been subjected to tax deducted at source by assessee". The Assessing Officer has further proceeded to observe since the assessee is a development authority of State Government of Haryana and is a taxable entity, deduction of tax at source provisions could be applicable on external development charges payable by the assessee through Haryana Urban Development Authority. Apart from making aforenoted observations and referring to section 194 and section 40(a)(ia), there is no apparent rationale for assumption of jurisdiction by the Assessing Officer. The judgment in Greater Mohali Area (supra) is of no assistance to the Revenue as the same is distinguishable on facts. In the said case, the petitioner who was recipient of external development charges had approached the court seeking quashing of the order disposing of its objections to the reasons recorded for reopening the assessment under sections 147 and 148 of the Act. In the assessment under section 143 (3) of the Act, the effect of external development charges upon petitioner's income was not referred to, the Assessing Officer sought to reopen the assessment on the basis of reason to believe that income on account of external development charges had escaped assessment. In these circumstances, since, the assessment order, did not deal with the character of the income of external development charges or its effect on petitioner's income, the court upheld the action of reopening on the ground that the issue had not been considered at the time of the assessment. Likewise, the other judgment relied upon by the Revenue in the case of New Okhla Industrial Development Authority (supra) is also distinct on facts. In the said case, the court was examining as to whether Greater Noida and Noida Authorities were local authorities within the meaning of section 10(20) of the Income-tax Act and whether their income was exempt from Income-tax. Deciding this question, the court held that the Noida and Greater Noida are not local authorities for the purpose of the Act. Therefore, the aforesaid decision has no relevance to the facts of the present case. 28. We would also like to reflect on section 194-1 and its Explanation which deals with rent and has been relied upon by the Revenue to contend that the definition of "rent" is broad and would also envisage the payment of external development charges and is subject to withholding tax. In support of this provision, the Revenue has relied upon the observations of the Supreme Court in New Okhla Industrial Development Authority (No. 2) v. CIT (Appeals) (2018) 406 ITR 209 (SC), the relevant portion whereof is reproduced herein below (page 218 of 406 ITR): "The definition of rent as contained in the Explanation is a very wide definition. The Explanation states that 'rent' means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of any 28. We would also like to reflect on section 194-1 and its Explanation which deals with rent and has been relied upon by the Revenue to contend that the definition of "rent" is broad and would also envisage the payment of external development charges and is subject to withholding tax. In support of this provision, the Revenue has relied upon the observations of the Supreme Court in New Okhla Industrial Development Authority (No. 2) v. CIT (Appeals) (2018) 406 ITR 209 (SC), the relevant portion whereof is reproduced herein below (page 218 of 406 ITR): "The definition of rent as contained in the Explanation is a very wide definition. The Explanation states that 'rent' means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of any land. The High Court has read the relevant clauses of the lease deed and has rightly come to the conclusion that payment which is to be made as annual rent is rent within the meaning of section 194-1, we do not find any infirmity in the aforesaid conclusion of the High Court. The High Court has rightly held that tax deducted at source shall be deducted on the payment of the lease rent to the Greater Noida as per section 194-1. Reliance on circular dated January 30, 1995 has been placed by the Noida/Greater Noida. A perusal of the circular dated January 30, 1995 indicate that the query which has been answered in the above circular is 'Whether requirement of deduction of Income-tax at source under section 194-1 applies in case of payment by way of rent to the Government, statutory authorities referred to in section 10(20A) and local authorities whose income under the head 'Income from house property‘ or 'Income from other sources' is exempt from Income-tax." 29. We are unable to see as to how the above provision and decision is of any assistance to the Revenue. It can be seen from the quoted portion of the said judgment that in the said case, the payment of annual rent was considered to be falling within the ambit of section 194 -I , a conclusion drawn by the court on a reading of the relevant clauses of the lease deed. In the present case, the external development charges, on the aforesaid rationality, cannot be subjected to section 194-1 of the Act. Moreover, if such was the understanding of the Revenue, it should have been well founded and disclosed in the reasons recorded by the Assessing Officer. Deduction of tax at source is dealt with under Chapter XVII of the Income- tax Act. The provisions enumerated thereunder, stipulate requirement of deduction of tax at source. The Revenue is unable to point out any specific provision which deals with external development charges payment except for alluding to section 194-1. We need not delve into this question any further as we do not find this to be a ground spelt out in the reasons for reopening the assessment under section 147 of the Act. The statutory orders containing reasons have to be judged on the basis of what is apparent and not what is explained later. The Revenue cannot be permitted to improve the same by offering better explanation during the course of the proceedings. On this issue we would like to refer the view of the Supreme Court in Mohinder Singh Gill v. Chief Election Commissioner (1978) 1 SCC 405 where it has been held "The second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise.‖ 15.Yet another challenge thereafter came to be laid before this Court in DLF Homes Panchkula Pvt. Ltd. vs. Joint Commissioner of Income Tax[11]with the respondents this time taking the position that TDS on EDC was liable to be deducted by virtue ofSection 194I. This stand came to be negatived with our Court holding that EDC could not be termed as „rent‟so as to fall within the ambit of Section 194I. 15.Yet another challenge thereafter came to be laid before this Court in DLF Homes Panchkula Pvt. Ltd. vs. Joint Commissioner of Income Tax[11]with the respondents this time taking the position that TDS on EDC was liable to be deducted by virtue ofSection 194I. This stand came to be negatived with our Court holding that EDC could not be termed as „rent‟so as to fall within the ambit of Section 194I. 16.The writ petitioners have also referred to the views expressed by different benches of the Income Tax Appellate Tribunal[12] while dealing with penalty proceedings. However, insofar as RPS Infrastructure is concerned, it appears to have been placed on notice with respect to a levy of penalty under Section 271C for Financial Years[13]2013-14, 2014-15 and 2015-16. While dealing with the aforesaid issue the Additional Commissioner of Income Tax in terms of an order made on 15 January 2018 took the following stand:- ―4.1. HUDA was constituted under Haryana Urban Development Authority Act, 1977. The functions of HUDA are: a. To promote and secure development of urban areas with the power to acquire. sell and dispose off property, both movable and immovable. b To acquire develop and dispose off land for residential. Industrial. commercial and institutional purposes. c To make available developed land to Haryana Housing board and other bodies for provi